A Unified View of Customer Value

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According to the Direct Marketing Association's latest State of the Catalog Industry study, 53 percent of catalog operations are now part of larger, multichannel organizations with brick-and-mortar stores and e-commerce sites.


This dramatic transformation to a multichannel business model presents catalog marketers with unprecedented challenges and opportunities -- more prospects, more customers and more opportunities to win or lose them. Rising postal costs, greater consumer expectations and increasing competition only make the situation more challenging.


To achieve marketing success and find better ways to communicate with customers in this new environment, many catalogers are returning to the basics.


Topping the list is a renewed focus on the customer. For catalogers, developing a unified view of the customer is critical to maximizing the return on investment of marketing dollars and effectively targeting today's multichannel customers. It is a step "back to the future" when merchants knew their customers' names, knew what they purchased in the past, what they were most likely to buy in the future and how to keep them coming back.


Now using advanced technology, catalogers can apply this philosophy to millions of multichannel customers by reaching the right customers with the right communications at the right time. To do this, catalog marketers must transform the information they have into actionable data that reflect a deep understanding of what individual customers prefer.


Catalogers can develop this unified view of the customer by following four proven strategies for strengthening customer satisfaction and loyalty, and ultimately increasing profitability.


See the forest ... The best customers are those who use more than one channel, such as shoppers who frequent the brick-and-mortar store but order through the catalog during the holiday season or online shoppers who request catalogs from a Web site.


Customers see one company, not multiple channels, so it is critical that marketers recognize customers regardless of how they shop. The experience -- through a catalog, at a brick-and-mortar store, on the Internet, at a kiosk or on the phone with a call center representative -- must be consistent.


Unfortunately, many companies rely on information that is siloed, or kept in one department or channel. Siloed information by its nature limits the view of the customer to a specific way of doing business, an ineffective practice in today's multichannel world. Breaking these silos down for a true, enterprisewide source of customer information is often the first and most important step in developing a total view of the customer.


... and the trees. Once siloed information is shared across the organization, catalog marketers can use advanced technology to analyze and segment the customer base. This uncovers the purchasing patterns of highly targeted customers and identifies diamonds in the rough -- the customers who represent cross-sell and upsell opportunities and are found when customer information is analyzed across multiple touch points.


The first step is to develop detailed customer segments. This is a dynamic exercise that fluctuates to reflect marketers' long-term and short-term goals but should always lead to increased response rates, lower mailing costs and improved ROI.


Proven customer segments include:


· Best event customers.


· Most profitable customers in all channels.


· Most profitable catalog customers.


· Most profitable seasonal book customers.


· Most profitable product-specific customers.


Take, for example, the cataloger that expands operations to include an e-commerce site. Through detailed segmentation, the marketer identifies customers who consistently limit their purchases to a specific time of year but receive multiple catalogs. With detailed information on who these customers are, the catalog marketer can limit catalog mailings to the holiday book and send targeted e-mails with special offers throughout the year. The ROI of marketing dollars spent on these customers is increased.


Think in the long term. Increasing profitability requires that catalogers adapt their campaign strategy to meet a business value test that never changes: Does the campaign increase profitability? Many catalogers are surprised to find that some do not.


Take the customer who makes a large purchase, then fails to respond to ensuing offers. Does the customer warrant an additional catalog, or will postage and printing costs exceed the profit already earned? Some continue to send books to these types of customers; others stop at a set time.


A long-term, flexible strategy based on a unified view of the customer gives the marketer additional options to satisfy the business value test. A general mailing may be too costly, but a direct mail piece with a special offer may be in order. Maybe the customer now purchases frequently online and is a natural fit for a targeted e-mail. Thinking in the long term, with a unified view of the customer, uncovers the subtle points that can turn a good marketing program into a great one.


Measure once, measure again. To truly determine what is working, catalog marketers must continually gauge the effectiveness of their programs. With the proper benchmarks in place, catalogers can uncover the patterns, both in long-term behavior and for specific promotions, that reflect the preferences of the customer.


Examples of common benchmarks include a specified percentage lift in cross-sell or increase in dollars spent per transaction; however, catalog marketers should fine-tune all benchmarks to directly reflect the specifics of their organizations. Benchmarks that illustrate an increase in kiosk or bridal registry sales do not apply to everyone but are excellent examples.


Acting on the customer's preferences quickly increases the ROI for specific campaigns and the overall marketing program. Comparing similar campaigns can quickly uncover trends, including increases or decreases in specific segments. Measurement can show a segment with greater potential that is not being marketed to enough or uncover customer attrition before it is felt on the bottom line.


Leverage lessons learned. Catalog marketing is not an exact science. By applying lessons learned to the overall marketing program, catalogers can adapt to the evolving needs and preferences of multichannel customers. Every campaign provides insight into what works best for specific customers. Using this information to refine the overall marketing program decreases costs and increases effectiveness.


The bottom line. Leveraging a unified view of the customer and advanced technology, catalog marketers can increase sales, make the most of the cross-sell and upsell opportunities, and increase profitability by providing the right customers with the offers at the right time.


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